California Labor Commission ruled that Uber needs to treat its drivers as employees instead of independent contractors. That would mean Uber would have to provide unemployment insurance and pay for workers' compensation for its drivers.

The labor commission wants Uber to classify Barbara Berwick as an employee rather than a contractor.

Uber uses technology to match freelance drivers to passengers needing a lift. Similarly apps, such as Airbnb or Handy, match those having a spare room or domestic/trades skills with those in need. This approach is termed as the sharing economy and is seen by some as potentially beneficial to the functioning of the labor market.

This approach could be seen to potentially benefit Society, particularly freelancers as such platforms provide flexible working and reduce freelancers' transaction costs. The costs are reduced automatically by assigning payment to them for their services.

However, the model has prompted conflicts with existing businesses over allegations related to users' safety and unfair competition. The concerns are particularly for heavily regulated industries such as hotels and licensed cabs.

Fines were imposed on Airbnb in Barcelona for issues around accountability and unfair trade after the company failed to register with the local authorities.

Regulatory issues specific to employment crop up in many of these firms' business models. Handy explicitly states on its website that it is not an employer. By not affording workers employee status, organizations reduce their responsibilities and legal obligations.

Employees, who work under a direct employment contract with an organization, are distinct from "workers" who do not in the UK.

In case of unfair dismissal as well as being deprived of various forms of leave and statutory sick and redundancy pay, workers are not allowed compensation.